Introduction
Understanding the differences between employees and contractors is essential when discussing employment law. Employment law governs the relationship between employers and employees. Employers have a duty to comply with the relevant regulations and laws to protect employees and ensure their rights are respected. Today, it is more common for businesses and organizations to hire contractors and freelancers, which can make it more difficult to decipher employment laws and who they relate to. There are currently almost 60 million independent workers in the US (source).
In this comprehensive guide, we’ll explain the differences between contractor vs employee and provide advice for those who need legal help.
Understanding Employment Law
Employment law is the field of law, which covers the legal responsibilities of employers and employees. When you employ people or accept a job offer and sign a contract, you assume specific responsibilities. If there are disputes, or an employee feels they are not being treated right, employment law firms can offer expert advice to resolve disputes or take cases to court. To understand employment law fully, it’s critical to recognize the difference between employees vs. contractors. Contractors and freelancers do not have the same rights as employees.
Key Differences: Contractor vs. Employee
There are several important differences between a contractor and an employee. Key areas include:
- Employment status: Employees are employed by organizations or individuals. Contactors are self-employed.
- Schedule: Most employees have set hours, which are specified in their contracts. Contractors have more flexibility. They determine their own hours.
- Taxes: Employees pay taxes through their wages. Contractors must pay self-employed taxes.
- Benefits: Employees have access to employee benefits schemes and entitlements, such as paid leave. Self-employed individuals do not have access to these benefits from companies that hire them on a freelance basis.
- Pay: Employees receive a salary or fixed payments. The salary and frequency of payments are outlined in the employment contract. Contractors usually set their own fees. They do not have a salary.
Rights and Responsibilities
Employees have access to benefits and entitlements and they are protected by employment contracts and labor laws, such as the Fair Labor Standards Act. Employees receive a salary, which must exceed the current minimum wage, and they usually have benefits packages, which may include access to health insurance, paid annual leave and sickness cover. If an employee signs a contract, they have a responsibility to comply with the terms and conditions of that agreement. Employers must also adhere to the terms and conditions and comply with state and federal labor laws and guidelines.
Contractors are not covered by the Fair Labor Standards Act and they don’t have employment contracts. Self-employed individuals usually use contractor agreements, which outline responsibilities and compensation for specific jobs or projects.
Legal Protections for Workers
The US Department of Labor implements over 100 laws to protect workers. Key examples of legal protections for employees in the US include:
- Access to the minimum wage
- Occupational Health and Safety Administration protections for safe workplaces
- Social Security and healthcare benefits
- Unemployment insurance benefits
- Whistleblower protections
- Family leave
- Workplace rights to minimize the risk of discrimination
As an employee, you have access to these protections through your employment status. If you are an independent contractor, you will not be protected by the Fair Labor Standards Act. Protections for independent contractors through federal laws are limited, but some states, including Illinois and California, have introduced additional measures to protect gig workers, freelancers and contractors from harassment and discrimination.
Navigating Labor Disputes
In an ideal world, every employee would feel respected and valued, but sadly, this is not always the case. In 2023, more than 450,000 workers went on strike in the US due to poor working conditions (source). Legal protections are in place to minimize the risk of workers facing challenges, such as discrimination, unfair dismissal, sexual harassment, salary and overtime disputes and contract negotiation difficulties. If an employee feels that the employer has broken the terms of the contract, or they are being treated unfairly, they have a right to seek legal advice. Employers must comply with state and federal regulations and respect the terms of the employee’s contract.
If you want to challenge a decision, you feel like you’ve been a victim of discrimination, or you have queries about your contract, it’s wise to seek expert legal advice. Experienced employment law attorneys have the knowledge and skills to identify issues, engage in negotiations and resolve disputes. In many cases, employees and employers can come to an agreement without the need for legal intervention, but it’s essential that employees know their rights. If employers don’t respond to open communication, or they continue to flout rules or display unsuitable behavior, the next step is to consider legal action.
Seeking Legal Advice
If you have any concerns about your employment rights or the terms and conditions of your contract, or you feel like you’re not being treated fairly by your employer, seek legal advice. Speaking to a trained, experienced employment lawyer will provide clarification. If you have grounds to pursue legal action, your legal team will be on hand to guide you through the process. The team will gather evidence to build a strong case and fight your corner. If you are an independent contractor, you may be protected by state regulations if you feel like you have been discriminated against.
Compliance with Regulations
Employers in the US must comply with regulations in line with federal and state laws that protect workers and create safe, supportive workplaces. If employers don’t adhere to rules and guidelines, or they fail to fulfill the responsibilities outlined in the employment contract, employees have the right to challenge decisions and take legal action. It is more difficult for contractors to navigate legal disputes because they don’t have access to the same benefits and protections as employees. In some cases, it may be possible for self-employed individuals to pursue action if an organization has broken state laws or failed to adhere to the terms of the contractor agreement.
Summary
Employment law is a field of law, which governs the relationship between employers and employees. When discussing employment law, it’s critical to understand the difference between employees and contractors. Employees in the US are protected by multiple laws and regulations. Employees have access to benefits and protections that contractors don’t. While employees have employment contracts, fixed salaries and set schedules, contractors are self-employed. They control their hours and fees and are responsible for their own taxes. Enhanced protections make it easier for employees to navigate labor disputes and take legal action against employers who fail to comply with labor laws or respect employee rights.
